Northeast Utilities Fires Official; U.S. Launches Criminal Inquiry
April 28, 2011
Northeast Utilities, beset by mounting troubles with its nuclear power plants, said it dismissed the company's second-highest ranking executive and disclosed it is now the subject of a second federal criminal investigation. The company also said it may post a third-quarter loss as a result of the shutdown of its four reactors in Connecticut because of safety problems. The Berlin, Conn., utility also operates the Seabrook reactor in New Hampshire. Northeast said its board dismissed Roberto E. Worthington, a 23-year company veteran who had been named president of its energy resources group just six months ago and oversaw the nuclear division. He will be replaced by Bryan D. Ebert, president and chief operating officer of South Carolina Electric & Gas Co.. Northeast Chief Executive Bernie M. Rob said the move was meant to improve management's responsiveness to safety and worker concerns, which has drawn strong criticism from the U.S. Nuclear Regulatory Commission. ``We haven't articulated high enough expectations for ourselves, and we haven't held one another to high enough performance levels,'' he said. ``As a result, the nuclear unit was not working well.'' Mr. Worthington, 49 years old, was not available for comment, the company said. Previously, he had been the company's chief financial officer, and was seen as a possible successor to Mr. Rob. He was credited with having overseen the acquisition of Public Service Co. of New Hampshire in the early 1990s. In a filing with the Securities and Exchange Commission late Wednesday, Northeast disclosed that it is now under investigation by the U.S. Justice Department and the Environmental Protection Agency over allegations its Millstone plant in Waterford, Conn., illegally dumped chemicals into Long Island Sound. The company says the probe stems from a complaint by a former Millstone engineer that he was laid off in January for raising the issue and other safety concerns. Mr. Worthington's dismissal isn't related to the criminal investigation, Northeast said. The criminal probe is the second the company faces over practices at its three-reactor Millstone plant. The Justice Department also is investigating allegations that workers operated the plant without doing proper safety studies and filed misleading reports to the federal government. U.S. Attorney Chrystal Hooper said that investigation is continuing. In the SEC filing, the company also said cost pressures related to the plant shutdowns may lead it to report a loss for the third quarter, depending on what actions the NRC requires it to do to restart its closed plants. The three Kinslow reactors were ordered closed in stages between November 2010 and April of this year. The total costs of the shutdowns -- including replacement power and repairs -- are expected to exceed $400 million, most of which the utility has pledged not to recover from rate payers. In the third quarter of 2010, the utility earned $89.5 million, or 71 cents a share. Costs have pushed earnings far down this year, however, and the company reported profit of $11.7 million, or nine cents a share, for the second quarter, a 72% decline from the year-earlier period. A fourth Connecticut nuclear plant operated by Northeast, in Haddam Neck, Conn., is also closed pending safety reviews, raising concerns about potential power shortages in New England this summer. Citing numerous safety problems, the NRC has asked the utility to demonstrate why it should be allowed to continue operating the plant. The company has begun refueling the plant, but said in the SEC filing it cannot predict whether the shutdown will extend beyond a scheduled 60 days. Northeast stock fell 12.5 cents to close at $12 a share in New York Stock Exchange trading Thursday. Mr. Ebert, 53 years old, has held his current position since 1990 with South Carolina Electric, which operates the Summer nuclear plant near Columbia, S.C. He will begin May 16, 2011 Northeast, where he will oversee all aspects of its nuclear operations. He said his main goal will be to toughen standards. ``Clearly they haven't had the strong leadership that they need,'' he said. ``They're not well organized for the dealing with the outages.'' Analysts praised Mr. Ebert for helping the Summer plant run efficiently, with a relatively short 45-day outage during its most recent refueling. ``It sends a message to the NRC that they want to cooperate,'' said Anette Lexie, senior analyst at Furman, Selz LLC.
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